It is widely recognized that much physical complaining and many medical visits are precipitated by emotional distress rather than physical disease. It is also widely recognized that a person's emotional state can aggravate existing physical disease and impede recovery from illness and surgery. It is natural then to consider whether making psychotherapy available for patients with such conditions might be an effective way to deal with their complaints and to reduce misutilization of costly medical services. We propose a series of interrelated studies of medical utilization and costs and effects of psychotherapy on medical utilization by analyzing the large data resource represented by the Blue Cross and Blue Shield FEP health insurance claims. From 1974-1978 their files include data of about 7 million Federal employees and family members. This health insurance program includes generous mental health benefits as well as full coverage for physical illness. The data base thus permits studies of the effects of mental health treatment on large numbers of persons with various somatic diagnoses and demographic characteristics and the effects of mental health treatment for one member of a family on the medical utilization of other family members. We can also study "the natural course of illness" in terms of medical utilization of persons with various diagnoses at different ages and assess the effects of various kinds of medical and mental health interventions. We have developed techniques of time series analysis to deal with some of the methodological problems that beset most retrospective studies of the impact of psychotherapy on medical utilization. Information developed through the study of these claims files could provide the basis for the rational inclusion of psychotherapy and other mental health services in private and public comprehensive health care plans.